Policy Focus: Regulations And Child-Care Costs

Carrie L. Lukas

Childcare can be a major expense for single parents and families in which both parents work. Full-time, center-based childcare cost an estimated $14,508 in 2014 on average for an infant, and $12,280 for a four-year old, according to Child Care Aware of America. While some government programs help working parents afford childcare, parents directly pay an estimated 60 percent of costs.

New research suggests that these costs are higher than they need to be. Economists writing for the Mercatus Center evaluated common childcare regulations and found that some (such as child-to-care giver ratios) are associated with significantly higher costs, but not meaningfully improved quality. Therefore, policymakers could roll back these regulations, potentially saving working families thousands of dollars, without sacrificing childcare quality. Eliminating inefficient regulations could also encourage more providers to enter the marketplace, bolstering the supply of childcare and further bringing down costs.

Less regulation and more competition can make child care more affordable. However, childcare will never be cheap, nor should it be: It’s a labor intensive industry, and child-care providers need to be properly compensated. Most public debate about childcare isn’t really about price, but who should pay: parents or taxpayers?

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Independent Women’s Forum’s mission is to improve the lives of Americans by increasing the number of women who value free markets and personal liberty. Sister organization of Independent Women’s Voice.